Democrats have criticized both moves and on Wednesday renewed calls for an independent review of the treasury department's hiring and compensation practices.

Dillon announced his resignation in October following a messy divorce. At the time, Snyder noted that Dillon would "remain available to assist the new treasurer with the transition" but did not make it clear that he would also remain on the state payroll through late January, earning the monthly equivalent of his $174,000 salary.

Snyder addressed the controversy Monday night during an hour-long talk at the University of Michigan's Ross School of Business, where he explained that Dillon stuck around as a consultant to help new Treasurer Kevin Clinton during his first months of the job.

The transition period was especially important, Snyder said, because Dillon had been devoting extra time to Detroit's bankruptcy, which the governor called "one of the most important issues in the history" of Michigan.

"Wouldn't you like to have this person and the new person working together for three or four months while that transition goes on and you're in the middle of that bankruptcy?" Snyder said. "Folks, I call that common sense."

The Dillon decision was more of a head scratcher, according to legislative Democratic leaders, who responded via conference call on Wednesday.

House Minority Leader Tim Greimel (D-Auburn Hills) pointed to an anonymously sourced report by the MotorCity Muckracker suggesting that Dillon was on a Caribbean Cruise during his final days as a paid consultant. The treasury said his work had already concluded. Greimel also noted Clinton's own comments that he hadn't kept a tally on Dillon's hours.

"At best, Dillon was phoning it in," Greimel said. "At worst, he was a no-show employee who was being paid a six-figure salary at taxpayer expense not to work."

Snyder, responding to a follow-up question on Monday night, also explained why officials in the treasury's Bureau of Investments received major pay raises last year, making them some of the highest-paid employees in state government. Chief Investment officer Jon Braeutigam, for instance, got a 90 percent pay raise from $175,000 to $333,000 a year.

Snyder said the raises were approved following a market analysis showing the investment officials -- who manage state pension funds and oversee roughly $71 billion in assets -- did not earn as much as their counterparts managing public or private funds of similar sizes in other parts of the country.

"These are rare professionals that manage money, and we were significantly underpaying them and were having a lot of them leave," Snyder told students. "We were having turnover issues in terms of keeping these people."

Senate Minority Leader Gretchen Whitmer (D-East Lansing) pointed out that Richard DiBartolomeo -- a former Snyder campaign aide and NERD Fund treasurer -- is now one of those investment officials making $180,000 a year.

"I believe this raises serious questions regarding whether he was seriously qualified for this position," Whitmer said, "and if he was, how do they justify boosting that salary?"

Whitmer, who proposed an independent investigation of the treasury earlier this year, reiterated that call Wednesday, suggesting the probe could be led by appointees of both Republican and Democratic leadership to ensure a partisan process.

Jeremy Allen of the The Ann Arbor News contributed to this report.

Jonathan Oosting is a Capitol reporter for MLive Media Group. Email him, find him on Google+ or follow him on Twitter.